Member Briefing January 16, 2025
PPI = 3.3%. Wholesale Inflation Increased Less Than Expected In December
Wholesale prices rose less than expected in December, a positive sign for the economy amid recent market fears that inflation isn't falling as quickly as hoped to the Federal Reserve's 2% target. Tuesday's report from the Bureau of Labor Statistics showed that its producer price index (PPI) — which tracks the price changes companies see — rose 3.3%% from the year prior, up from the 3% seen in November but below the 3.5% increase economists had projected. On a monthly basis, prices increased 0.2%, below the 0.4% increase economists had expected.
Excluding food and energy, "core" prices rose 3.5% year-over-year, above November's 3.4% gain. Economists had expected an increase of 3.8%. Meanwhile, month-over-month core prices were unchanged, below the 0.3% increase economists had expected and the 0.2% gain seen last month.
NFIB SURVEY: Small Business Optimism Surges to Six-Year High
The NFIB Small Business Optimism Index rose by 3.4 points in December to 105.1, the second consecutive month above the 51-year average of 98 and the highest reading since October 2018. Of the 10 Optimism Index components, seven increased, two decreased, and one was unchanged. The Uncertainty Index declined 12 points in December to 86. Key findings include:
- The net percent of owners expecting the economy to improve rose 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983.
- The percent of small business owners believing it is a good time to expand their business rose six points to 20%, seasonally adjusted. This is the highest reading since February 2020.
- The net percent of owners expecting higher real sales volumes rose eight points to a net 22% (seasonally adjusted), the highest reading since January 2020.
- A net 6% (seasonally adjusted) of owners plan inventory investment in the coming months, up five points from November and the highest reading since December 2021.
- Seasonally adjusted, a net 29% reported raising compensation, down three points from November and the lowest reading since March 2021.
- A net 1% of owners reported paying a higher rate on their most recent loan, down four points from November and the lowest reading since September 2021.
- Twenty percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), unchanged from November and leading labor quality as the top issue by one point.
Machine Tool Orders Signal Improving Demand
U.S. machine shops and other manufacturers ordered $448.8 million worth of capital equipment during in November, 16.8% more than during October and 12.4% more than during November 2023. The new figure raises the 11-month total for manufacturing technology orders to $4.18 billion, which is -5.7% less than the comparable total for January-November 2023. AMT noted that the November results continue the upward trend in order value that first appeared with the September 2024 ($450.6 million) report, and are “nearly 30% above a typical November … the highest order level for any November since 2021.”
AMT noted that November manufacturing technology orders from contract machine shops – the largest segment of the customer market – were at their highest level since March 2023. “This is a welcome sign for the larger manufacturing sector, as these shops typically receive additional work when OEMs experience capacity constraints,” AMT reported. By contrast, aerospace manufacturers’ orders fell from decreased their orders from October but are still ahead of their 2024 average, “indicating the effects of the nearly two- month strike of Boeing machinists likely only shifted demand.”
Read more at American Machinist
Global Headlines
Middle East
- Hamas Has Accepted A Draft Agreement For A Gaza Ceasefire And The Release Of Hostages, Officials Say - AP
- Three Things That Could Make A Gaza Hostage Deal More Likely – BBC
- Gaza Ceasefire Plan: 1,000 Palestinian Detainees To Be Freed, Reports - Newsweek
- Israeli Minister Ben-Gvir Threatens To Quit Netanyahu Cabinet Over Gaza Deal - Reuters
- Israel Defies Expectations With Surge in Tech Funding Despite War - WSJ
- Blinken Lays Out Post-War Gaza Plan To Be Handed To Trump Team - Reuters
- Moscow Breaks Silence on Black Box Data of Crashed AZAL Plane - Newsweek
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- North Korea's Suicide Soldiers Pose New Challenge For Ukraine In War With Russia – Reuters
- Russia Hit by Massive Internet Outage - Newsweek
- A Key Ukrainian Brigade Disintegrated, Leaders In Kyiv Panicked—And Then Came Badly Needed Reform - Forbes
- Kremlin Oligarchs Still Prosper Despite Western Sanctions - VOA
- Ukraine Launches Largest Attack Of War So Far, Kyiv Claims - BBC
- Ukraine Strikes Russia In ‘Major’ Drone And Missile Attack, Russian Media And Officials Report - CNN
- Interactive Map: Assessed Control Of Terrain In Ukraine – Institute For The Study Of War
- Map – Tracking Russia’s Invasion Of Ukraine – Live Universal Awareness Map
Other Headlines
- California Fires Live Updates: At Least 24 Killed As Returning Winds Threaten To Undo Progress – CNN
- France Danced ‘Fatal Tango’ With Debt, PM Bayrou Says As He Takes Aim At Predecessors – Politico
- France's New Prime Minister Announces Renegotiation Of Contested Plan To Raise Retirement Age - VOA
- China Officials Discuss Option of TikTok Sale to Elon Musk - WSJ
- Kate Reveals She Is In Remission From Cancer - BBC
- Venezuela AG Requests Interpol Red Notice For Opposition's Leopoldo Lopez - Reuters
- Nearly Half The World’s Population Holds Antisemitic Beliefs - Politico
- Eurozone's Uneven Economic Recovery Means More Monetary Easing – Wells Fargo
- Number Of Internally Displaced People In Haiti Tripled In 2024 - BBC
Policy and Politics
Breaking Down Hochul’s State of the State
Gov. Kathy Hochul presented her agenda for the year in her annual State of the State address in Albany on Tuesday. She touted middle-class tax cuts and rebates in the form of direct checks, while pledging to assign police to patrol subway cars overnight in New York City. Although Hochul has said that election results are not driving her agenda for the year, she is making cost-of-living issues the cornerstone of her plan for 2025. The governor had started to roll out initiatives in the lead up to her State of the State address with the tagline “Money In Your Pockets.”
Ahead of her speech, Hochul released a 144-page agenda book laying out her plans on affordability and more in the coming year. It is still light on some key details, which will come when the governor presents her executive budget next week. In the very first sentence of the forward, Hochul wrote that “our future depends upon the ability of every family to afford the essentials of life, and our future depends upon our ability to protect the safety and security of our residents.” It condensed the messaging that she has been focused on for the past several weeks, and set the tone for the policies that made up the rest of the document. Here are some of the policy proposals Hochul is proposing in her State of the State.
Johnson Wants Budget Blueprint Passed By Feb. 27
Speaker Mike Johnson set out a six-week timeline Tuesday for passing a budget blueprint — a necessary first step in getting President-elect Donald Trump's sprawling domestic agenda through Congress. Under the timeline Johnson set out, the House would need to coalesce around a strategy and write a budget resolution by Feb. 10, setting up floor debate and adoption that week. The Senate would then debate the measure and adopt it the following week. The timeline was described by two Republicans familiar with Johnson's plans.
It will be a major challenge to meet that timeline, given the House and Senate are currently pursuing two different plans, both utilizing the party-line reconciliation process. Adoption of a budget resolution is a necessary first step in that process. Johnson said in a closed-door House GOP Conference meeting that he had spoken earlier in the morning with Trump — who remains, he said, inclined to aim for one massive bill that spans border, energy and tax policy, according to two Republicans with direct knowledge of the matter. House conservative hard-liners pushed Trump at Mar-a-Lago this weekend to embrace the two-track strategy preferred in the Senate, with little success.
NAM Study: Tax Provisions’ Expiration Will Cost U.S. Jobs, Wages, GDP
Allowing crucial pro-manufacturing tax provisions to expire will be devastating for the U.S. economy, according to a landmark EY study released today by the NAM. “Pro-growth tax policies from President Trump’s 2017 tax reforms were rocket fuel for manufacturers and made the U.S. economy more competitive on a global scale,” NAM President and CEO Jay Timmons said. But in 2022, key provisions began to expire—and additional tax reform measures are scheduled to sunset at the end of this year. If Congress doesn’t preserve these pro-growth policies, the U.S. economy will face dire consequences: Nearly 6 million jobs will be put at risk. Approximately $540 billion in employee compensation will be lost. U.S. GDP will be reduced by $1.1 trillion.
The manufacturing industry will bear the brunt of this economic damage, according to the study. More than 1.1 million manufacturing jobs and $126 billion in manufacturing worker wages are on the line if Congress does not preserve critical pro-manufacturing policies from the Tax Cuts and Jobs Act. The U.S. economy relies heavily on manufacturers, which in turn rely on competitive tax policy—and that makes these provisions’ renewal crucial, said Johnson & Johnson Executive Vice President and Chief Technical Operations & Risk Officer and NAM Board Chair Kathy Wengel. “[M]anufacturers—both large and small—drive innovation, create opportunity and strengthen communities across the country. ... Maintaining competitive tax policy is essential to sustaining this momentum.”
Transition 2024
- Senate Panel Presses Pentagon Nominee Hegseth Over Allegations - WSJ
- Democrats’ Hopes Of Derailing Trump Nominees Fading Fast – The Hill
- Biden Touts A ‘Stronger’ America Because Of His Foreign Policy - VOA
- The Tricky Questions Facing Trump's Nominees For Top Jobs - BBC
- U.S. Capitol Flags Will Be at Full-Staff During Trump Inauguration, House Speaker Says - WSJ
- Trump Says He Wants To Establish ‘External Revenue Service’ To Collect Tariff Money - Forbes
- Trump Plans ‘Energy Dominance’ Executive Orders After Inauguration - WSJ
- Biden Executive Order To Bolster Us Ai Infrastructure Requires Green Power - Newsweek
- Johnson Appoints Virginia Foxx As Rules Committee Chair – The Hill
- Tracking Trump’s Cabinet Picks – Politico
Health and Wellness
Moderna Says It’s ‘One Step Closer’ To A Norovirus Vaccine As The Virus Spreads Across The U.S.
“Stomach bug,” “cruise-ship virus,” “winter vomiting disease”—all are nicknames for norovirus, the top cause of vomiting, diarrhea, and foodborne illness in the U.S. The contagious ailment typically circulates throughout the late fall, winter, and early spring, and the 2024–25 season is no exception. Nationwide test positivity was nearly 23% the week ended Dec. 28, compared to less than 11% six weeks earlier, according to the Centers for Disease Control and Prevention (CDC). Up to 21 million people contract norovirus each year in the U.S. alone, the CDC says.
Moderna, is recruiting adult participants for Nova 301, its Phase 3 clinical trial evaluating an investigational norovirus vaccine called mRNA-1403. The first U.S. participant in the global, randomized controlled trial received their dose in September. “Norovirus is a significant public health concern that affects millions of people worldwide each year, leading to severe symptoms and, in some cases, hospitalization,” Moderna CEO Stéphane Bancel said in a Sept. 30 news release. “By advancing our investigational norovirus vaccine into a pivotal Phase 3 trial, we are one step closer to potentially providing a new tool to prevent infection from this highly contagious virus, which places a significant burden on health systems globally.”
Industry News
Chipmakers Slash Investment Plans By $9.5 Billion
The 10 top global semiconductor companies are cutting billions of dollars in planned capital spending as they are forced to contend with softening demand from EV makers and smartphone manufacturers. The global semiconductor market was valued at $620 Billion in 2024, according to the World Semiconductor Trade Statistics, up 19% year-on-year.Investment plans for each of the company’s fiscal 2024 show an aggregate 2% decrease year-over-year to A$199.21 billion, an approximately A$15.36 billion decrease from their May estimates, reported Nikkei Asia.
Intel which has been struggling and has seen its share price decrease by nearly 60% over the last year has cut its investment to $24.75 billion from the initial figure of over $30 billion. It logged a record quarterly net loss of $16.6 billion for the three months through September as losses in its chip foundry business mounted. Samsung Electronics’ semiconductor investments for 2024 decreased 1% to about $34.6 billion, the first decline in five years. Approximately 70% of chip fabrication capacity is in use worldwide, according to industry group SEMI – around 10% less than what is considered healthy.
Read More at Channel News (Australia)
Respect at Work Returns to a Record Low
The percentage of U.S. employees who strongly agree that they are treated with respect at work has returned to the record low of 37% first recorded in 2022. Gallup began measuring respect at work in 2018. Respect declined for all types of workers in 2022 -- across industries, job levels, and demographic characteristics like gender and age. This occurred during the height of the Great Resignation (2021-2022) when many employers required workers to come back to the office, and employees quit their jobs at historically high rates. Remote-capable onsite workers saw the biggest drop in perceptions of respect in 2022, from 46% to 35%.
Respect and employee engagement are intertwined. Engaged employees are surrounded by coworkers who listen to their opinions, recognize their hard work and care about their development. Not surprisingly, they feel respected. Gallup finds that when employees are engaged at work, they are five times more likely to strongly agree that they are treated with respect at work.
FuzeHub Manufacturing Grants: Round 1 for Established Companies - Applications Open Monday, January 20
FuzeHub, an Albany based organization supporting New York State Manufacturing businesses. has announced that their 2025 Manufacturing Grants: Round 1 will open for applications on January 20, 2025, exclusively for established companies in New York State. As part of the Jeff Lawrence Innovation Fund, these grants foster collaboration between not-for-profit organizations and small to medium-sized manufacturers, supporting success at every stage of development. The program identifies innovative projects that build partnerships, generate economic impacts, and drive growth in New York’s manufacturing sector.
New this year, FuzeHub is introducing separate rounds for industry partners based on company stage. The main applicant is still a not-for-profit organization, but: Round 1 is exclusively for Established Companies that are eligible to participate as industry partners. Applications will be open from January 20, 2025 to February 19, 2025. Round 2 is exclusively for Startup Companies that are eligible to participate as industry partners. Applications will be open from April 15 2025 to May 14, 2025. Funding is available for grants up to $65,000 per project, where the total number of awards will vary based on available funding and application quality.
Jack Daniels' Parent Brown-Forman Is Cutting Its Workforce And Closing Its Barrel-Making Plant
Spirits giant Brown-Forman Corp. said Tuesday it's reducing its global workforce by about 12% and closing its hometown barrel-making plant in Louisville. The cost-cutting moves come as American whiskey producers face stiff challenges from changing consumer trends and renewed tariff threats. The company's cooperage, where barrels are made to store and age its spirits, will close by April 25, affecting about 210 hourly and salaried employees, it said. The closure is part of the overall 12% reduction in the company's 5,400-employee global workforce. Brown-Forman said it will source barrels from an external supplier and expects to receive more than $30 million from selling cooperage assets.
The company's cutbacks come as the overall American whiskey sector faces headwinds that coincide with massive inventories of aging whiskeys that will someday reach the market. In Kentucky, a record 14.3 million barrels of bourbon are aging, the Kentucky Distillers’ Association said last month. Industrywide challenges include indications that younger adults are drinking less alcohol and the threat of American whiskey getting entangled in another trade war. Meanwhile, U.S. Surgeon General Vivek Murthy said recently that Americans should be better informed about the link between alcohol and cancer. The risk should be clearly labeled on drinks Americans consume, Murthy proposed.
Boeing Delivered 30 Airplanes In December, Gap With Airbus Widens
Boeing handed over 348 airplanes in 2024, about a third fewer than it did a year earlier as the aerospace giant struggled with a crisis after a midair door panel blowout a year ago and a machinist strike in the fall that halted production. The tally widened the delivery gap with Boeing’s chief rival, Airbus, which gave 766 jetliners to customers last year, the most since 2019, though both companies are facing supply chain strains that have slowed production and fulfillment of their otherwise robust backlogs.
In December, Boeing delivered 30 airplanes as it restarted production of its bestselling 737 Max planes after the nearly eight-week machinist strike ended the month before. Deliveries are key for manufacturers because it is when customers pay the bulk of an airplane’s price. A shortage of aircraft from suppliers has driven up lease rates, with rentals expected to hit records this year, aviation data firm IBA said in a report this month.
Global Air Financiers See Jet Shortages Dragging On As Values Soar
The world's largest aircraft lessors forecast on Monday that manufacturing delays would drag on until the end of the decade at least, keeping prices high and limiting the entry of new players into an industry that controls half of the world's jets. The world's top lessors, all among the largest buyers of Boeing and Airbus aircraft, traded stories of crippling delays and sky-high lease rates paid by airline clients at the annual Airline Economics meeting in Ireland, where most of the industry is based.
Delegates are split on how long the shortage will last. “Several lessors and observers think the market can return to an excess of capacity after three years or so," Grabowski said. Others believe the removal of some 4,000 jets left unbuilt during the pandemic will keep airlines short of jets for longer. Airbus is targeting production of 75 A320-family jets a month in 2027, having pushed back the goal repeatedly due to supply woes. Boeing is edging back towards 38 of the competing 737 MAX a month - an interim ceiling imposed by regulators following the blow-out of a door plug on a 737 MAX a year ago.
BlueOval SK Receives $9.63B DOE Loan To Build 3 Battery Manufacturing Plants In Tennessee And Kentucky
BlueOval SK LLC has announced the closing of a direct loan with the U.S. Department of Energy’s (DOE) Loan Programs Office (LPO). The company, a joint venture between Ford Motor Company and SK On that was created to supply Ford with batteries for its growing electric vehicle (EV) product line, will receive up to $9.63 billion to aid in the construction of up to three manufacturing plants.
The new facilities, which will be located in Tennessee and Kentucky, will produce batteries for Ford Motor Company’s future Ford and Lincoln EVs. According to the company, the three plants will enable more than 120 gigawatt hours of U.S. battery production annually, and the project will create 7,500 new jobs for the surrounding areas.
Labor Market - Balance of Power Shifts Back Toward Bosses
On the surface, the job market looks as strong as ever. Beneath the surface, workers are getting a very different message: Their bosses are back in command. Big companies are tightening remote-work policies, shrinking travel budgets and cutting back on benefits. On Friday, JPMorgan Chase told employees that most hybrid workers would have to come back to the office five days a week starting in March. Amazon.com ordered employees back to the office full-time starting this month, and Dell Technologies did the same for its sales team last fall. Companies are slashing perks such as college-tuition assistance and time off for a sick pet.
The moves show how the balance of power between employers and employees has shifted as the labor market has gone from white-hot to merely solid. The job market is still, by any metric, healthy. Indeed, vacancies have risen since September. Jobs grew by a surprisingly strong 256,000 in December from November and gains averaged 186,000 a month in 2024. But 76% of the job growth in the past year has been in healthcare and education, leisure and hospitality, and government. In fields such as finance, information, and professional and business services, job growth has been far weaker.